- Right after the stock market crashed on Oct. 19, 1987, Robert Shiller sent investors a questionnaire to figure out what caused it.
- His research showed that trader panic was as culpable as the computer programs that worsened the crash, contrary to the government and many traders' conclusions.
- The same panic can happen again, Shiller wrote in the New York Times, and new technology can spread fear even faster.
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SHILLER: Most people got the cause of Black Monday's stock market crash wrong
Shiller's research into the cause of the stock market's crash contradicted many other accounts.
On the 30th anniversary of Black Monday, the Nobel prize-winning author Robert Shiller is reiterating his view of what really happened.
Writing in the New York Times on Thursday, Shiller argued that the Dow's 22% plunge — its worst ever — was caused primarily by mass investor panic, not the computers they had set up to trade stocks. His conclusion is that this behavior could happen again.
Shiller highlighted research he published in November 1987, which contradicted the Reagan administration's conclusion. The government's Brady Commission said the crash was primarily caused by mutual funds meeting redemption orders, and institutional investors who used portfolio insurance — a program that systematically sold equity futures as the prices fell.
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